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Small Alabama City Says It’s Broke, Files for Bankruptcy

Bloomberg logoBloomberg 5/20/2020 Amanda Albright
a man holding a stop light: A medical personnel wearing personal protective equipment (PPE) is silhouetted while administering a swab test at a drive-thru testing site in San Pablo, California, U.S., on Tuesday, April 28, 2020. © Bloomberg A medical personnel wearing personal protective equipment (PPE) is silhouetted while administering a swab test at a drive-thru testing site in San Pablo, California, U.S., on Tuesday, April 28, 2020.

(Bloomberg) -- The small city of Fairfield, Alabama, filed for Chapter 9 bankruptcy protection on Tuesday, a rare step by a municipality that comes as local budgets across the nation are upended by the coronavirus pandemic.

The city’s filing in the U.S. Bankruptcy Court for the Northern District of Alabama listed assets and liabilities between $1 and $10 million. A resolution signed by Mayor Eddie J. Penny included with the bankruptcy filing noted that Fairfield had “exhausted its options” after years of working to shore up its finances.

“The city has faced a substantial decline in revenues in recent years due to economic forces beyond its control,” the resolution says. It was unclear whether the shutdowns intended to mitigate the spread of the coronavirus in the U.S. worsened the city’s financial problems.

Located about eight miles (12 kilometers) from Birmingham, Fairfield is a mostly African-American community with about 11,000 residents. About one-fifth live in poverty, according to the U.S. Census Bureau. The city is located in Jefferson County, which went bankrupt in 2011.

Related: Jefferson County Bankruptcy Foreshadows Fate of Cities in Crisis

R. Scott Williams, a Rumberger, Kirk & Caldwell lawyer representing the city, declined to comment. The city’s mayor could not immediately be reached for comment.

Ambac Financial Group Inc. insures some Fairfield city bonds and is listed as a creditor in filings associated with the bankruptcy.

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